Santa Rosa’s Luther Burbank Savings sees 35% rise in Q3 net income
Luther Burbank Corp. (Nasdaq: LBC) announced Wednesday net income was $14.3 million for the third quarter ending Sept. 30.
Despite this year’s COVID-19-spawned disturbances affecting the economy, Luther Burbank Savings of Santa Rosa reported a rise in net income of 35% in comparison to the second quarter. The diluted earnings per common share amounted to 27 cents, which reflects convertible securities.
In contrast to 2019’s $12.7 million in net income for the same period, the results demonstrated “a sound quality of portfolio,” President and CEO Simone Lagomarsino told analysts on Wednesday morning’s investor relations conference call.
“Our credit quality has remained strong,” Lagomarsino said.
Amid adversity led by the coronavirus outbreak, the bank has reported no loan write-offs needed to assist its clientele, and 269 loan modifications were made.
In line with its “conservative credit culture,” the Luther Burbank chief said bank officials are tightening underwriting requirements.
Also helping the situation, the financial institution has also sustained “no property losses from the wildfires” that have kept California on edge this summer and fall. A historic 4.1 million acres have burned throughout the state.
“I’m proud of our strong quarter and continued resilience of our net interest margin,” Lagomarsino declared.
The 2.03% net return on investment compared to the second quarter’s 1.88% was widely driven by a reduction in loan loss provisions, which are reflected in “positive credit trends,” the bank CEO pointed out.
Lagomarsino warned that, while she’s encouraged by the loan business, she recognizes further “headwinds” remain in political uncertainty and the ongoing pandemic, to name a few issues.
“The pandemic is still not over. And what if there’s a second wave?” she told the Business Journal.
Still, the bank’s focus on multi-family real estate accounts has paid off in helping “to stabilize the single-family” business, she indicated. Quite simply, there’s strength in numbers. It stands to reason that multiple tenants are less apt to all renege on their rents opposed to a couple financing one home.
Going forward, Lagomarsino shared with the Business Journal that other possibilities in keeping the bank solvent remain on the table. Such as, she added, some of its more than 280 employees have been “redeployed” in more critical areas of the bank’s operations.
“We’ve worked extraordinarily hard at avoiding layoffs,” she said.
At least 70% of employees are working remotely through the end of the year. And even then, the bank may revisit the policy “if there’s an increase in new cases,” she noted.
Total assets for Luther Burbank Corp. as of Sept. 30 amount to $7.1 billion, an increase of $25.8 million from the end of last year.
The Board of Directors for Luther Burbank, which operates 11 branches and three administrative offices, declared a quarterly cash dividend of 5 cents per common share payable to shareholders on Nov. 16.
Susan Wood covers law, cannabis, production and agriculture as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times in San Diego County, Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or email@example.com.